Washington - Christine Lagarde would not automatically be forced to resign her job as head of the International Monetary Fund if a French court decides to prosecute her in the Bernard Tapie case.
But such a ruling could weaken her as managing director of the Fund, after having led it through four difficult eurozone rescues in her 22 months in the job.
And it would mean the second IMF managing director in a row - both French - beset by legal problems, after the sex scandal that forced the resignation of her predecessor, Dominique Strauss-Kahn.
The IMF board was well aware of Lagarde's French legal problems when they chose her to lead the global crisis lender in June 2011.
She has repeatedly said the probe into her actions in the Bernard Tapie case when she was France's finance minister has never interfered with her IMF duties.
The judges will grill her this week over her handling of the case that led to the French government paying Tapie compensation of 400-million euros over a dispute with a state-controlled bank.
If the court decides to prosecute the case, she and the IMF could be forced to re-assess the situation.
Nothing in her contract says she would have to resign.
But it does say she must maintain the integrity of the office and “strive to avoid even the appearance of impropriety in your conduct”.
Lagarde has declared her innocence in the case ever since she was nominated to the IMF post.
“There's nothing new under the sun,” she reiterated last month. “Ever since 2011, I had known very well that I will be heard by the investigative commission of the Cour de Justice.”
And the IMF has consistently backed her.
After her Paris apartment was searched on March 20, Fund spokesman Gerry Rice said: “The executive board has been briefed on this matter, including recently, and continues to express its confidence in the managing director's ability to effectively carry out her duties.”
But the IMF has been particularly sensitive since the Strauss-Kahn case.
He was arrested in New York in May 2011 for allegedly raping a hotel maid, and had to resign within days to deal with the case.
Eventually the criminal charges were dropped due to lack of evidence for rape, though Strauss-Kahn admitted having sex with the woman.
The clauses on integrity were added to the managing director's contract after the Strauss-Kahn case, and the IMF also in 2012 published a new code of conduct that requires management to maintain the “highest standards of ethical conduct”.
The IMF declined to comment anew on the case this week when contacted by reporters. - Sapa-AFP